Ghana’s power sector faces a potential crisis as disagreements over the arrears owed to Independent Power Producers (IPPs) continue.
The IPPs claim the government owes them over $2 billion, while the government asserts the debt is $1 billion. If not resolved amicably and promptly, this dispute could result in another round of power outages.
In a new article copied to The Accra Times, Dr. Elikplim Kwabla Apetorgbor, Chief Executive of IPPs, criticized Finance Minister Dr. Mohammed Amin Adam’s claim that he has “reconciled or restructured” the IPPs’ arrears to $1 billion. Dr. Apetorgbor argues that this assertion oversimplifies the complex financial obligations involved. He accused the Finance Minister of engaging in political propaganda, stating that “the use of the high office of a finance minister for political propaganda undermines the credibility of financial management in the sector.”
Dr. Apetorgbor emphasised that proper accounting for power, particularly in the context of Power Purchase Agreements (PPAs), must adhere to every clause within these agreements. He called on the Finance Minister to present a realistic picture, “no matter the frightening outlook, and make full disclosure of the financial situation.”
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According to Dr. Apetorgbor, a detailed reconciliation should include interest charges on delayed payments, idle capacity charges, exchange rate losses, and any other claims under the PPAs. Additionally, he stressed the importance of explaining how changes in laws and fuel price variations have been accounted for. These changes in law include new taxes or levies such as the Growth and Sustainability Levy, Emissions Levy, and Energy Commission’s Variable Charge, which he claims add to the arrears owed to the IPPs. Dr. Apetorgbor also called for clarification of the methodology used to arrive at the $1 billion figure, ensuring that all financial obligations under the PPAs are accurately reflected.
The CEO of the IPPs called for “careful scenario and sensitivity analyses on the options proposed” to make the debt restructuring proposal credible, acceptable, and fair to investors in the power sector.
The Finance Minister in a press conference held on July 1, accused Dr. Apetorgbor of pursuing his own agenda “The CEO may be doing his own thing”. He said contrary to the CEO’s position, the government had reached an agreement with five out of seven IPPs, downplaying the threat of a possible shutdown of plants. But industry watchers are concerned that without a thorough analysis and transparency, the dispute could severely impact Ghana’s power supply and economic stability.
